The ESDC's economic impact (not cost-benefit) analysis won't be subject to any public scrutiny because it doesn't yet exist
That number--not a real cost-benefit analysis, despite use of that term at the informational meeting last Wednesday--may emerge when the board of the ESDC votes to approve the plan in September. There just won't be an opportunity to comment on it or examine the methodology behind it.
During the meeting, moderator Craig Hammerman, District Manager of Community Board 6, asked how the ESDC’s economic impact analysis was conducted.
The answer from ESDC Senior Counsel Steve Matlin (in video, below, with Forest City Ratner's MaryAnne Gilmartin) was vague. Expected construction costs and tax benefits were plugged into a model, and calculations were reflected in the 2006 Modified General Project Plan (MGPP).
“We’re constantly looking at that analysis and updating that analysis,” he asserted, a statement belied by the absence of any new numbers in the 2009 MGPP. He suggested that, since the the cost of the project has increased, “I’d expect that fiscal benefits will probably increase.”
“Will the cost-benefit analysis be available on the ESDC web site?” Hammerman asked later.
Matlin looked slightly quizzical, then offered a bland answer: “The summary of the cost-benefit analysis was in the 2006 [Modified] GPP and carried forward in the 2009 [Modified] GPP. To the extent those numbers are updated, we will reflect them at our next board approval, which we expect will be in September of 2009.”
Later, the issue came up again.
"How can the Empire State Development Corporation properly evaluate the appropriateness of subsidies for the project without producing an independent cost-benefit analysis?" Hammerman read.
"Well, ESDC does do a cost-benefit analysis," Matlin replied. "We have folks that look at the benefits of the project and the costs of the project. That''s an ongoing analysis, and we perform that internally."
"How come it's never been released?" asked project opponent Scott Turner from the crowd.
I'd add that the ESDC analysis is premised on the impacts of a ten-year buildout, and that seems very unlikely--given that the project, should it be built, more likely would take "decades," as former ESDC CEO Marisa Lago said in April.
What about the IBO report?
Hammerman read a question about a New York City Independent Budget Office (IBO) report that concluded the arena would be a net money-loser for the city.
“We have heard that report,” Matlin replied phlegmatically. “We do our own analysis. We basically do an analysis of the entire project. We don’t do a separate analysis just of the arena component. What we bargained for was the entire project. We bargained for the benefits generated from the entire project. Our calculations determined that there would be a significant benefit to both the city and the state from the buildout of the project. I believe the city--the Mayor’s office and the EDC [New York City Economic Development Corporation] also reached a similar conclusion.”
However, they use different methodologies and the IBO has been more scrupulous about trying to assess public costs and subsidies.
Later, asked if ESDC or FCR disputed the IBO report, watch how Gilmartin handed the microphone to Matlin with a slight scowl. Matlin then said, "We have not looked closely at that report. We do our own number-crunching. We looked at the project as a whole as opposed to the arena specifically."
Later, Hammerman read a question asserting that the costs to create jobs and affordable housing are two to four times the city average--so how do ESDC and FCR justify spending public money this way.
“Stupid question,” offered a heckler.
“Y’know, I’m not sure what that question is premised on,” Matlin responded. “What we do is, on a project-by-project basis, we evaluate the investment that the state is making, that the public sector is making. We look at the potential benefits that we expect to be generated from the project. And we make an evaluation as to whether the project is worthwhile or not. That’s basically what we did in this project. I don’t know how it compares to other projects.”